Software Pricing: Are We Doing It Wrong?

'While there's an odd aspect of race to the bottom that I'm not sure is entirely healthy for the iPhone app ecosystem, the idea that software should be priced low enough to pass the average user's "why not" threshold is a powerful one.

What I think isn't well understood here is that low prices can be a force multiplier all out of proportion to the absolute reduction in price. Valve software has been aggressively experimenting in this area; consider the example of the game Left 4 Dead:

Valve co-founder Gabe Newell announced during a DICE keynote today that last weekend's half-price sale of Left 4 Dead resulted in a 3000% increase in sales of the game, posting overall sales (in dollar amount) that beat the title's original launch performance.

It's sobering to think that cutting the price in half, months later, made more money for Valve in total than launching the game at its original $49.95 price point. (And, incidentally, that's the price I paid for it. No worries, I got my fifty bucks worth of gameplay out of this excellent game months ago.)'


- Jeff Atwood, 'Software Pricing: Are We Doing It Wrong?'

Comments

Marty Thomas said…
Hi.. Your post got me thinking... What is more valuable for a software company (like facebook or flickr). 1,000 paying users or 100,000 non-paying users? What are your thoughts? View my blog post here: http://www.purlem.com/blog/?p=57
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